Trading system with price improvement

• US 8,112,348 B2
• Filed: 03/26/2009
• Issued: 02/07/2012
• Est. Priority Date: 03/26/2009
• Status: Expired

• Current Assignee: BGC Partners Incorporated (BGC Group, Inc.)
• Original Assignee: BGC Partners Incorporated (BGC Group, Inc.)
• Inventors: Sweeting, Michael
• Primary Examiner(s): Shrestha, Bijendra K
• Application Number:
  US12/412,119
• Publication Number:
  US 20100250425A1
• Time in Patent Office: 1,048 Days
• Field of Search: 705/37
• US Class Current: 705/37
• CPC Class Codes: G06Q 40/04 Trading; Exchange, e.g. stocks, commodities, derivatives or currency exchange

Abstract

Traders in an electronic trading system are provided an opportunity to improve prices for an item trading in an active market are provided. After a trader hits a bid or lifts an offer, a market becomes active. When the market is active, traders can submit orders that improve on the price of the current market price of an item. Whenever a price improvement order is currently available for use in a transaction order, a price improvement indicator is displayed to indicate to other traders that price improvement is occurring. When a price improvement order is used to fill a transaction order, a portion of the difference between the market price and the price improvement price may be divided between the trader associated with the price improvement order, the trader associated with the transaction order, and the system host.

Claims

1. A method comprising the steps of:

at a trader'"'"'s workstation in an electronic trading system designed to trade financial instruments, receiving data designed to cause presentation to the trader of one or more orders in a form executable by the trader to whom the orders are presented, the presented orders being orders to buy and/or sell a financial instrument at a specified price in a specified quantity, the electronic trading system establishing a standard price increment by which prices of orders differ, the standard price increment being a smallest incremental difference between price levels at which the system makes orders available for trading of the financial instrument;

at the trader'"'"'s workstation, receiving data representing a price-improved order from a matching server of the trading system, the price-improved order being either (a) an offer to sell at price lower than the best offer to sell currently presented with a price and quantity, the price being lower than the best offer by an amount less than the standard price increment, or (b) a bid to buy at a price higher than the best bid to buy currently presented with a price and quantity, the price being higher than the best bid by an amount less than the standard price increment, and

presenting data to the trader to indicate the availability of the price-improved order in a form executable by the trader, but withholding display of the price of the price-improved order at precision greater than the standard price increment.

2. The method of claim 1, wherein the price-improved order includes a specified quantity for said item.

3. The method of claim 2, wherein the quantity for the price-improved order is presented to the traders to whom the price-improved order is presented.

4. The method of claim 1, further comprising:

providing an opportunity to enter a price-improved order into the electronic trading system to only traders that entered a previous order that has been executed, the opportunity being open within a specified time after execution of the previous order.

5. The method of claim 1, further comprising the step of:

for a period of time following execution of the price-improved order, providing priority rights to a trader of a transaction executed on the price-improved order, the priority right providing an opportunity to temporarily stop orders from executing while the trader with the priority right has an exclusive opportunity to submit a new order.

6. The method of claim 1, further comprising the step of:

allowing a trader to submit the price-improved order at a variable price that floats at a user-determined increment relative to the best offer or best bid then pending during the time the price-improved order remains available to be traded.

7. The method of claim 1, wherein

the price-improved order is at a price improved relative to another price-improved order that is at a price outside the standard price increment.

8. The method of claim 1, wherein said predetermined price improvement level comprises a level that improves on the price of the last-executed transaction by a user-defined quantity.

9. The method of claim 1, wherein:

the price-improved order is at a price different from the best offer or best bid pending at the time the price-improved order is entered by an amount smaller than the standard price increment.

10. The method of claim 1 further comprising the step of:

displaying a visual price improvement indicator on a video screen of a trader to whom the price-improved order is presented, the visual price-improvement indicator being designed to indicate to the trader that the price-improved order is available to be traded.

11. A trader'"'"'s workstation computer, being programmed to:

generate data of an electronic trading system designed to trade financial instruments, the tradeable date being at prices being multiples of a standard price increment by which prices of orders differ, the data designed to cause presentation to traders of one or more orders in a form executable by the traders to whom the orders are presented, the orders to be presented being orders to buy and/or sell a financial instrument at a specified price in a specified quantity, the standard price increment being a smallest incremental difference between price levels at which the system makes orders available for trading of the financial instrument;

receive at least one price-improved order from the electronic trading system a trader, the price-improved order having a price and a quantity, the price-improved order being either (a) an offer to sell at price lower than the best offer to sell currently presented with a price and quantity, the price being lower than the best offer by an amount less than the standard price increment, or (b) a bid to buy at a price higher than the best bid to buy currently presented with a price and quantity, the price being higher than the best bid by an amount less than the standard price increment, and generate data for presentation to a trader at the workstation to indicate the availability of the price-improved order in a form executable by the trader, but withholding the precise price of the price-improved order at a precision greater than the standard price increment.

12. The trader'"'"'s workstation computer of claim 11, wherein the quantity for the price-improved order is presented to the traders to whom the price-improved order is presented.

13. The trader'"'"'s workstation computer of claim 11, wherein the price-improved order has a price set relative to a price of an order at a standard-increment price currently pending.

14. The trader'"'"'s workstation computer of claim 11, further comprising programs designed to cause one or more computers to:

provide an opportunity to enter a price-improved order into the electronic trading system to only traders that entered a previous order that has been executed, the opportunity being open within a specified time after execution of the previous order.

15. The trader'"'"'s workstation computer of claim 11, further comprising programs designed to cause one or more computers to:

for a period of time following execution of the price-improved order, providing priority rights to a trader of a transaction executed on the price-improved order, the priority right providing an opportunity to temporarily stop orders from executing while the trader with the priority right has an exclusive opportunity to submit a new order.

16. The trader'"'"'s workstation computer of claim 11, further comprising programs designed to cause one or more computers to:

allow a trader to submit the price-improved order at a variable price that floats at a user-determined increment relative to the best offer or best bid then pending during the time the price-improved order remains available to be traded.

17. The trader'"'"'s workstation computer of claim 11, wherein:

the price-improved order is at a price improved relative to another price-improved order that is at a price outside the standard price increment.

18. The trader'"'"'s workstation computer of claim 11, wherein:

said predetermined price improvement level comprises a level that improves on the price of the last-executed transaction by a user-defined quantity.

19. The trader'"'"'s workstation computer of claim 11, further comprising programs designed to cause one or more computers to:

validate the price-improved order by comparing its price to a price of a recently-executed transaction.

20. The trader'"'"'s workstation computer of claim 11, wherein:

the price-improved order is at a price different from the best offer or best bid pending at the time the price-improved order is entered by an amount smaller than the standard price increment.

21. The trader'"'"'s workstation computer of claim 11, further comprising programs designed to cause one or more computers to:

display a visual price improvement indicator on a video screen of a trader to whom the price-improved order is presented, the visual price-improvement indicator being designed to indicate to the trader that the price-improved order is available to be traded.

22. The trader'"'"'s workstation computer of claim 11, further comprising programs designed to cause one or more computers to:

execute a trade of the price-improved order at a price at a predetermined difference from the price of the price-improved order.

23. The trader'"'"'s workstation computer of claim 11, further comprising programs designed to cause one or more computers to:

for at least some of said price-improved orders, display a quantity of at least some price-improved orders.